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WHAT IS COBRA?
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When you leave a job, you don't necessarily need to leave your health insurance behind. Thanks to COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985), certain employers that provide a group health insurance plan must offer most employees who would lose their coverage the option to continue it for up to 18 months. The catch is that the employee will have to pay the full premium, up to 102 percent of the employer's cost. (The extra 2 percent is an administrative fee.)
COBRA is best seen as a safety net. You have 60 days to make a decision about whether to enroll in COBRA, and when you do, the coverage is retroactive. As soon as you know you will be losing your group coverage, start shopping for individual coverage. Go out and talk to independent agents who represent different companies. If you find a policy you like, apply for it. You should be able to find out if you are accepted within those 60 days. If you find a less expensive policy that meets your needs, buy it. If not, you can still elect COBRA.
COBRA covers all members of your family, so if you find an individual policy that works for you but won't cover your wife's pre-existing illness, go with COBRA only for her.
A pre-existing condition will make finding individual health coverage more complicated — and more pricey — but that shouldn't knock you out of the race completely. HIPAA restricts the ability of insurers to exclude pre-existing medical conditions from coverage but only if you were previously part of a group plan and meet certain other strict requirements |
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